The Boundaries of Banking and Credit Activity
Fintech licensing in Georgia begins, within the competence of the National Bank, with one simple prohibition: no one may take deposits and use them to issue credits without a banking activity licence or a microbank activity licence issued by the National Bank. Taking deposits and issuing credits — the classical banking model — requires a full compliance regime, and this requirement extends to the technological format as well: a mobile application or platform that in fact performs these functions cannot escape licensing by calling itself a technology company. The choice between a banking and a microbank licence depends on the architecture of the business model, and this decision must find its place in the product design in advance.
The Rule on Attracting Repayable Funds
The law draws a boundary on the next step as well: an entrepreneur subject or a group of affiliated persons may not, without registration as a microfinance organisation by the National Bank, a non-bank deposit-credit licence or a banking licence, attract repayable funds from more than 20 natural persons, including by taking a loan, or conduct advertising of the attraction of repayable funds from a wide circle of persons. This norm regulates precisely the step on which fintech startups most often approach the boundary: collecting money from consumers for a future service. The threshold of twenty is counted by the natural persons whose funds are attracted, and crossing it entails registration or a licence.
Exceptions from the Restriction
The restriction does not cover the entire financial space: the law separately lists exceptions that fall under other regulatory regimes. Among them are the public offering of securities, a private offering to an experienced investor, insurance activity, pension schemes, the activity of a brokerage company, a natural person's lending to another non-entrepreneur natural person, a partner's or shareholder's loan to the enterprise and contribution into its capital, services connected with electronic money, investment funds and asset management companies, a securitisation special purpose entity, and cases determined by the National Bank. Each exception rests on its own statute, so choosing the right route means establishing which regime covers the particular product.